The Reserve bank of India has increased its repo rate by 25 basis points to 6.25% and the reverse repo rate to 6% citing a big rise in crude prices

For the first time in more than four years the Reserve Bank of India has hiked key policy rates, increasing its repo or repurchase rate by 25 basis points to 6.25% and reverse repo rate to 6% at its monthly monetary policy meet late today.

The six-member monetary policy committee, headed by RBI governor Urjit Patel, took a unanimous decision, saying there had been a 12% increase in the price of Indian crude, which was “sharper, earlier than expected and seems to be durable”. But the RBI kept its stance ‘neutral’, the Financial Express reported.

The last time the central bank raised the short-term lending rate was in January 2014. In the years since it has either reduced it or maintained status quo.

This is for the first time the MPC met for three days, instead of the usual two days due to some administrative concerns.

Earlier, a poll conducted by Reuters had expected that RBI would hold key rates. The poll suggested that though an increasing number of economists expected the RBI to raise interest rates on Wednesday, most still thought the central bank will hold rates and use this week’s meeting to prepare for a hike in August.

However, concerns about inflation and higher fuel costs appear to have been the overriding factor in their latest move.